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D.C.-area companies nab $130M in Q3

Investors placed hefty bets on Washington-area companies over the past three months, doling out about $130 million to local companies in a mix of follow-on rounds of funding for known quantities and first-time venture raises for newly minted startups.

Venture capital in the third quarter flowed to well-established, already venture-backed companies like LivingSocial, OpGen Inc. and Zyngenia Inc. But much of the funding came in the form of startups capping series A rounds, the first infusion of venture capital after seed funding.

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And some of those companies had achieved a startling degree of maturity before turning to venture capitalists for the first time. EverFi Inc., a District-based financial literacy site, had put its product into about 2,000 schools by the time it accepted $11 million in venture funding from New Enterprise Associates and other investors. The company, until then, was entirely bootstapped.

Reston-based Koofers Inc., an online social-learning hub for college students that offers course materials, professor reviews and other tools, pulled in a $5 million
series A from New Atlantic Ventures and Altos Ventures in Menlo Park, Calif. — the firm which had provided the company with seed funding — and new investors QED Investors and AOL-cofounder Steve Case’s Revolution LLC. By the time it closed that funding round, the Virginia Tech-born startup had already amassed content from 400 schools, and garnered national press coverage.

“Companies get a lot further very quickly with a lot less cash than they did 10 years ago,” said John Backus, a partner with New Atlantic Ventures in Reston.
Those fundings reflect a broader debate of how much outside money startups need to raise in an era in which cloud computing is driving down the costs of doing business and social media is offering cheap marketing avenues.

But some industries, like biotechnology, remain capital intensive. While software companies dominated the quarter, two life sciences companies together accounted for $32 million amid an overall drought for the high-risk sector. Gaithersburg-based OpGen raised $17 million in a series B from jVen Capital, a fund started by the company’s one-time CEO Evan Jones, as well as CHL Medical Partners, Highland Capital Partners, Mason Wells Biomedical and Versant Ventures. Once on the ropes, OpGen earlier this year launched its first commercial product — the Argus Optical Mapping System — and plans to aggressively push into new markets with the microbe gene-mapping technology. Zyngenia, also based in Gaithersburg, extended a series A raise to gather another $15 million from New Enterprise Associates. The funds will help the biotech company develop its pipeline of therapeutics for autoimmune disorders and cancer. The company initially capped the funding round at $10 million in September 2009.

LivingSocial, an online group discount site that competes with Groupon, also hauled in millions by extending a $14 million old round — raising another $10 million from existing-backers U.S. Venture Partners, Grotech Ventures, Steve Case and Lightspeed Venture Partners.

Not all companies wanted to disclose every detail of their recent capital raises — or discuss the funding deals at all. In early September, Reston-based Contact Solutions Inc. announced an investment by North Bridge Growth Equity it framed in a news release as “one of this year’s most significant growth capital investments in the U.S.” The company would not, however, disclose the amount, which sources and news reports placed at $46 million. Contact Solutions helps business and government customers automate voice, e-mail and Web support.